False Claims Act

False Claims Act (FCA)

Understanding Qui Tam Actions and the FCA

The United States government loses billions of dollars each year to fraud and abuse. The False Claims Act (FCA) is designed to hold individuals and organizations that cheat the government accountable and to recover the money they stole. Under the FCA, parties who submit false claims and commit fraud against the federal government (excluding tax fraud) are liable to pay triple the government’s damages, plus civil penalties ranging from $5,500 to $11,000 per false claim.

The FCA, also called the Whistleblower Act, encourages citizens who have evidence of fraud against the government to contact a False Claims Act attorney and sue on the government’s behalf. Such lawsuits are known asqui tam lawsuits and the whistleblower is referred to as the “relator.” Under the qui tam provisions of the FCA, when the government joins a qui tam case, the relator is entitled to a reward of 15 percent to 25 percent of the money recovered by the government. If the United States does not join the qui tam lawsuit, the whistleblower may still pursue the legal action unilaterally and receive a reward of 25 percent to 30 percent of a successful recovery.

Many states have false claims acts modeled on the federal statute. These state statutes also allow a citizen file a qui tam lawsuit and bring whistleblower claims against companies and individuals cheating the state. These state qui tam statues also reward whistleblowers for providing information that leads to the recovery of state funds.

At Baum Hedlund, we can assist whistleblowers with filing claims under the FCA. Contact us today at (855) 948-5098 for more information.

False Claims Act Violations

The False Claims Act is a complex statute and it is critical that relators work with an experienced False Claims Act attorney to pursue their whistleblower claims. The FCA may be violated in several ways which include: overcharging for a product, providing a defective product, billing for a service that is not performed, delivering less than the promised amount of goods or services, underpaying money owed to the government, and charging for one thing but delivering another. A false claim is legally defined in section 3729 of the Act.

The False Claims Act also has provisions that protect whistleblowers who suffer retaliation by their employers for reporting the fraudulent conduct. A separate federal whistleblower act, known as the Whistleblower Protection Act, provides federal government employees with certain rights in the event their employers retaliate against them for making disclosures regarding illegal or improper government activities.

The False Claims Act History

As the Latin phrase “qui tam” suggests, governments have relied upon the people for the prevention of crimes against the state for centuries. Qui tam is short for the phrase “qui tam pro domino rege quam pro se ipso in hac parte sequitur,” which means “who pursues this action on our lord the king’s behalf as well as on his own,” and indeed, beginning in 13th century England, qui tam actions were employed to enforce the laws of the crown.

The first whistleblower law in United States history was passed by the Continental Congress on July 30, 1778. As related by Steven Kohn in his book, The Whistleblower’s Handbook: A Step-by-Step Guide to Doing What’s Right and Protecting Yourself, the law called upon “all persons in the service of the United States, as well as all other inhabitants thereof, to give the earliest information to Congress or any other proper authority of any misconduct, frauds, or misdemeanors committed by any persons in the service of these states, which may come to their knowledge.”

In passing the law, Kohn writes, the members of the Congress were responding in support of ten Revolutionary War sailors and marines who had petitioned them to have the commander of the Continental Navy, Commodore Esek Hopkins, removed from his post for torturing British soldiers. Hopkins had retaliated against the whistleblowers by filing a criminal libel suit, but Congressional action insured the petitioners were protected and Hopkins was removed from command.

In 1863, President Lincoln enacted the False Claims Act in an effort to stop war profiteers from defrauding the Union during the Civil War. Although the Act was successful in deterring fraud against the Union, the law was virtually unused after the war ended. A 1943 amendment to the Act, as interpreted by the courts, had the unfortunate effect of making it much more difficult for a citizen to file a successful qui tam lawsuit.

By the 1980s, Congress estimated that the U.S. government was losing tens of billions of dollars in undetected fraud schemes, many of them perpetrated by Department of Defense contractors. The government became concerned that most of these fraudulent claims were almost impossible to detect. As a result, in 1986 Congress again amended the FCA, this time strengthening its qui tam provisions in a way that permitted private citizens to once again become a key resource for the government in detecting fraud. Amendments to the law in 2009 and 2010 further strengthened it.

Today the FCA serves as an enormously effective fraud fighting tool which has enabled the government to recover billions of dollars. Citizens who come forward to report their knowledge of fraud are rewarded with a share of the money recovered by the government, and are protected from retaliation by their employers.

The False Claims Act is a complex statute and it is critical for anyone contemplating a qui tam lawsuit to consult with an attorney experienced in this area of the law. Contact Baum Hedlund at (855) 948-5098 if you have a whistleblower claim.

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